To celebrate the Internet’s 40th anniversary, DARPA, often referred to as the mad scientist wing of the Pentagon, will award a $40,000 prize to the first person or group to find all 10 of DARPA’s big red weather balloons.

But the contest is not all fun and games. DARPA is studying the participants to learn more about how large online groups share resources and compete using social networks. During the DARPA Network Challenge, each of the 10 red balloons will be placed in hidden but publicly accessible locations during the daylight hours of December 5. Would-be balloon hunters can start registering for the challenge on December 1, and have until December 14 to submit balloon locations to the contest website [Popular Science]. The agency has dropped a few vague clues, but they are mostly leaving it up to the balloon seekers to figure out how to conduct their search. DARPA will stand by and observe the contestants, collect data, and interview those involved about their search methods.

Today DARPA’s twitter feed reported that more than 300 people have signed up for the challenge. Peter Lee, a DARPA computer scientist and director of the contest, isn’t ready to make predictions about how the winning group will find all the balloons, but he said some groups are developing software applications. Dr. Lee said he also expected large teams of spotters and even the possibility that some groups might use subterfuge like disseminating false information. Other groups may try to pay for information, he said, noting that even during a brief experiment the agency ran with a balloon near its headquarters, information on the location was offered for sale on Craigslist [The New York Times]. While the balloons will be spread throughout the continental United States, anyone in the world can sign up to participate in the hunt.

What are the chances of being the first to report a balloon to the group that actually succeeds in winning? The low probability of receiving a smallish cash award isn’t worth the effort. But we’re offering a better prize. We feel the best way to get people involved is to share the wealth by investing the money into something we can all share, like building a giant flying cupcake entirely out of balloons.

As you might have heard, DARPA has announced a network challenge in the vein of the DARPA grand challenge.

In this challenge, participants are tasked with finding 10 red weather balloons distributed throughout the continental US for 8 hours on December 5. The idea is to get this to be a crowdsourcing kind of activity, where people will use social media tools to solve this problem.

Our group, the MIT Red Balloon Challenge Team at http://balloon.mit.edu/bloggers, based out of the MIT Media Lab, has created a system where you get money not just for finding balloons, but for getting people to join the hunt who find the balloons, or for getting people who get people who find balloons, etc. Here’s an image of the structure:

First you have to sign up, which you can do here. Then you can send invitations to others to join through your own unique URL, crediting you with recruiting them.

While our team is interested in winning the contest, we are also interested in studying information diffusion in social networks. Does Twitter spread information faster than blogs? Is your blog effective at spreading information?